Appellate courts must consider exemption grounds before directing a 20% deposit under Section 148 of the NI Act.

In brief

The question

Whether the appellate court could impose a condition to deposit 20% of the cheque amount without considering the appellant’s grounds for exemption or reduction.

The court held

The High Court set aside the 25 August 2026 order insofar as it required the petitioner to deposit 20% of the cheque amount and set aside the 15 September 2026 order dismissing her modification application.

It also directed

It remitted the application to the Principal Sessions Judge, Sivagangai, for fresh consideration on the merits and directed that it be decided within four weeks of receipt of the High Court’s order.

The petitions were allowed to that extent.

01Facts

The petitioner was convicted under Sections 138 and 142 of the Negotiable Instruments Act, 1881, and sentenced to one year’s simple imprisonment and to pay ₹5,00,000 as compensation in respect of a ₹3,00,000 cheque.

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Pending her appeal, the Principal Sessions Judge suspended the sentence subject to, among other conditions, depositing 20% of the cheque amount within 30 days.

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The petitioner’s subsequent application to dispense with or relax that deposit condition was dismissed; she challenged both orders before the High Court.

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02Issues

i.Whether the appellate court could impose a condition to deposit 20% of the cheque amount without considering the appellant’s grounds for exemption or reduction.

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ii.Whether the orders imposing and refusing to relax that condition should be set aside and the exemption application reconsidered.

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03Law Applied

Section 148 of the Negotiable Instruments Act, 1881, concerns deposit pending an appeal against conviction under Section 138; such a deposit condition must not be imposed mechanically.

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Where an appellant seeks a reduction or exemption and raises grounds in support, the appellate court must consider those grounds and give reasons if it nevertheless directs a deposit.

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The Court relied on C.R. Balasubramanian v. P. Eswaramoorthi (Crl.O.P. No. 947 of 2024, 22 January 2024), which stated this principle, and noted the petitioner’s reliance on Jamboo Bhandari v. M.P. State Industrial Development Corporation Ltd. and Muskan Enterprises v. State of Punjab.

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The suspension application had been brought under Section 430(1) of the Bharatiya Nagarik Suraksha Sanhita, 2023.

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Provisions in the judgment · 4 · Linked ones open on LawLens

Negotiable Instruments Act, 1881 Section 138 Section 142 Section 148

Bharatiya Nagarik Suraksha Sanhita, 2023 Section 430

04Reasoning

The petitioner had raised grounds in her appeal and specifically sought exemption from depositing the cheque or compensation amount.

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Neither the original suspension order nor the order dismissing her modification application addressed those grounds; the latter merely stated that no satisfactory reason for relaxation had been given.

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Applying the rule against mechanical imposition of a deposit condition, the High Court found that the appellate court had not applied its mind and held that the exemption plea required fresh consideration on its merits.

p. 5